Claim Bank Charges Back - Helping you to reclaim Unfair Bank Charges!

Recently some people have asked me if I have stoped working on the Claim Bank Charges Back site.

As a result, I just wanted to reassure everyone that I am still working on this site, and adding new news stories etc.

Unfortunately, although the court case back in February 2008 to determine if bank charges are legal or not finished a couple of weeks ago, a final verdict has not been reached by the Judge.

When the trial ended the Judge said it would take a while for him to reach a verdict, purely because of the amount of paperwork the banks submitted to try and support their case, as well as delaying proceedings, although no deadline has been set for th result.. Because of this, everything is still in limbo and there have been no recent news article or developments.

I do check on the situation on a daily basis, and any relevant content is added to the site.

As soon as the verdict is reached, it will posted on this site, as well as any relevant news reports.

Hopefully normal service will be resuming soon!

Having studied the 2007 annual accounts of leading UK’s banks, the BBC estimates that during the year, over £750 million was repaid to customers who demanded the return of charges made for breaching their overdraft limits.

Five leading High Street banks alone have paid back a combined £549 million, broken down as follows: Lloyds TSB £76 million; Barclays £116 million; HBOS £122 million; RBS Natwest £119 million; HSBC £116 million.

However, worse may follow because it is estimated that UK banks could be liable to pay a further £1.37 billion for 2007, if the Office of Fair Trading is successful in a High Court test case brought to establish the legality of the charges.

Many claims by customers have been put on hold, awaiting a judgement in the court case, and the BBC calculates that a further £1.37 billion could have been paid out by the banks last year if the court had not granted a stay on new cases and some already in hand.

The stay does not prevent consumers registering new claims or banks making goodwill payments where there are special circumstances.

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The OFT's test case on unauthorised bank default charges will start on Thursday 17 January at 10.30am at the International Dispute Resolution Centre.
The case was due to begin on Wednesday at the International Dispute Resolution Centre, but was postponed due to the Judge's prior commitments running over.

The purpose of the application is to get a ruling on whether the provisions of the UTCCRs (Unfair Terms in Consumer Contracts Regulations) that deal with unfairness, apply to unauthorised overdraft charges, and will not address whether terms and conditions or specific charges of individual banks are unfair.

The OFT said, however, that it continued to analyse information supplied by the banks. It added that further information on the investigation into unfairness would be published after the judgment had been delivered and OFT had had time to consider any implications.

The application for the declaration is brought against Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc, HSBC Bank plc, Lloyds TSB Bank plc, Nationwide Building Society and Royal Bank of Scotland Group plc.

The hearing is expected to last three weeks with judgment to follow some time later.

The OFT has published more information about the case and has a website section that explains more about the work on bank personal current accounts, available at the link below.

A High Court test case could change the face of UK banking as high street lenders are forced to justify unauthorised overdraft charges.

Seven leading banks and the Nationwide building society are being challenged by The Office of Fair Trading (OFT) which claims the charges are unfair.
The banks, which earn up to £10 million a day from the penalties, say they are entirely legal.

The case formally begins later, with legal papers read, but the hearing is not expected to open until Wednesday.

Banks are thought to make between £2 billion and £3.5 billion a year in fees charged when customers go into unauthorised overdraft.

The fees charged to customers can be as high as £39, but campaigners claim that the actual cost to banks is as little as £2.50.

The regulator will argue that the overdraft charges come under the scope of the 1999 Unfair Terms in Consumer Contracts Regulations.

In recent years, millions of people have challenged their banks - many in court - over the charges and several hundred thousand are estimated to have had over £500 million refunded.

Which? spokesman Doug Taylor said: "I think it will mean that the default charges will be reduced for consumers and I would hope that at the end of the day, the customers would feel they are getting a better deal than they currently feel they are getting from their banks."

The OFT is set to argue at the International Dispute Resolution Centre in central London, that the overdraft charges come under the scope of the 1999 Unfair Terms in Consumer Contracts Regulations.

But banks claim the charges are not a penalty but a fee for a service.

If the judge rules that the charges come under this legislation, the High Court could then decide at a separate hearing at a later date on what a fair charge should be.

"It means (if we win) that we can go back to the court with new evidence from our banks market study and start to talk about whether and what a fair amount should be," a spokeswoman for the OFT said.

Bank customers can incur the charges for taking out an unauthorised overdraft or breaching their authorised limit.

Charges can also be levied if customers make a payment but have insufficient funds in their account to cover it or if banks stop a payment because the account holder does not have enough money.

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This spring should see the end of a long wait for customers of the High Street banks that have been accused of making unlawful charges for unauthorised overdrafts.

It is nearly two years since the Office of Fair Trading (OFT) first reviewed the controversial charges and matters will now be settled in the High Court.

The case is scheduled to begin on 14th January, when the Court will determine the legality of charges made to account holders who exceeded overdraft limits and bounced cheques and direct debits.

The banks could be ordered to refund their account-holders and only charge for the administration costs of their customers’ misdemeanours.

Over £800 million has already been paid out by the banks in refunds, although this process has been suspended until the outcome of the test case brought by the OFT.

If the OFT is successful, some estimates put the amount owed by banks to their customers as high as £4.7 billion.

The OFT has already offered the major banks a chance to establish an acceptable level of charges prior to the Court date, but the banks have maintained their stance that the charges are legal and fair.

Last year, the chief executive of the British Bankers’ Association, Angela Knight, stated:

“The banks have always been firmly of the view that the fees they charge customers are fair and clear. The court case will clarify these points and provide certainty for customers and banks alike.”

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Bank customers who wish to claim back the charges which the Office of Fair Trading has deemed unlawful will not have to wait much longer to find out whether or not they will be able to.

Almost two years after the OFT declared that the charges are unlawful, a court case will finally commence on January 14 which will determine the legality of bank charges made for such things as exceeding overdraft limits, bouncing cheques and having insufficient funds for direct debits.

Customers have already claimed back more than £800 million pounds, but this process has been suspended until an official decision has settled the issue. It is thought that if the courts find banks to have been acting unlawfully by implementing these charges, the amount owed to customers could be as much as £4.7 billion.

A decision in court will not only determine once and for all whether the banks should refund their customers and only charge administration costs, but will also clarify the charges, set a precedent, and see that the banks act lawfully.

Before legal proceedings were embarked upon, the OFT gave the major banks an opportunity to meet in the middle, to establish some ground rules regarding the charges and avoid taking the controversy to court, but the banks stood firmly by their convictions that the charges are legal and fair.

Last year, when it was announced that the case will go to court, British Bankers' Association chief executive, Angela Knight, said: "The banks have always been firmly of the view that the fees they charge customers are fair and clear. The court case will clarify these points and provide certainty for customers and banks alike."

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Make sure you don't get hit by Bank Charges during the Postal Strikes!

If possible make your payments online, or send your payments early so they reach your bank account or credit card in time.

Reuters - Thousands of consumers could soon be hit with late payment charges on bills and credit cards, following the postal strike.

Although deliveries resumed on Wednesday after a 48-hour walk-out by Royal Mail workers, a backlog of over 60 million items has built up.

Members of the Communication Workers Union (CWU) are due to walk out again on Monday in the first of a series of one-day strikes over pay, pensions and shift changes.

The disruption could result in swingeing penalties for late payments.

"Those borrowers who put cheques in the post to their lenders over the last 10 days or so stand to incur a late charge as their remittances languish in the Post Office's overflowing depots," said Richard Brown, chief executive of price comparison service Moneynet.co.uk.

He said credit card companies and utility firms, some of which also levy late payment penalties, stood to land a "huge windfall from others' misfortune" and urged those who think they might be hit to contact the company concerned.

"With little or no deliveries this week and a huge backlog of post to be dealt with, millions of people could be affected unless they pick up the phone to their lender and stamp out the possibility of being treated as a bad payer," he said.

Barclaycard, Britain's biggest credit card issuer, said those who paid their bills late would automatically be hit with penalties.

"We can't stop the system from applying charges across the board," said a spokeswoman.

She urged those who think their payment or statement might have been delayed due to the strike to contact the company.

"We are being flexible with people where there is a genuine delay as a result of the postal strike," she added.

The Office of Fair Trading has forced providers to cut credit card default charges to 12 pounds or less and is now investigating banks' pricing structures in a wide-reaching study that is due to be published by the end of the year.

Industry commentators have said a wider crackdown on charges could herald an end to "free banking" as companies try to recoup lost revenue.

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Previously, tens of thousands of people have successfully recovered their bank charges. The situation is rather more complicated now. The financial regulator, the Financial Services Authority (FSA), has made claiming more difficult in the short term. We hope this was an accident. But let's start from the beginning of this latest chapter in the bank charges saga:

The Office of Fair Trading's court case

The Office of Fair Trading (OFT) believes, like I do, that charges for such things as exceeding overdraft limits and bounced cheques are unlawful. As a result, it is taking a 'super-claim' to the High Court on behalf of all claimants. It is taking the following banks to court:

• Abbey
• Barclays
• Clydesdale
• HBOS (which includes Halifax and Bank of Scotland)
• HSBC
• Lloyds
• Nationwide
• Royal Bank of Scotland Group (which includes NatWest)

If the claim is successful, which is very likely, it doesn't mean we'll all get our money back automatically. What will probably happen is we'll still have to submit claims to our banks, although with the High Court precedent it should be easier to win our claims, especially if your bank is one of those involved in the super-claim.

The OFT's claim could easily take as long as five years when you factor in the many tricks the banks' lawyers can use to delay a final conclusion, including appealing against the initial High Court decision.

The FSA's waiver to banks

As a result of the OFT's claim, the FSA has agreed that all banks (not just those involved in the court case) can stop dealing with complaints and claims about bank charges. All banks must do now is respond to complaints within five days, stating that the matter will not be considered until after the OFT's claim is concluded.

The FSA has paved the way for the Financial Ombudsman Service to stop dealing with bank charges complaints and the FOS has already done this. Finally, many or most of the county courts, with the blessing of the FSA, have stopped processing our individual claims.

The idea behind all this is so that there is consistency in decisions and to settle the matter of unlawful charges once and for all...

The problems caused by the waiver

...And that all sounds rather neat, doesn't it? We'd all like consistency. The huge problem, though, is that now and for many years we have absolutely no recourse under the law for getting our money back: money that was taken from us unlawfully.

Thankfully, many courts will still consider claims from people with serious financial difficulties, but there are millions more who are owed money, an average £1,000 each, who must wait. That money could significantly reduce the nation's heavy debt bill, by paying off a decent chunk of our credit-card bills, for example. This would reduce the interest payments on our credit cards by hundreds or thousands of pounds per year.

Also, many people will be pushed into financial difficulties before the OFT case is settled, because of interest on the charges, and because of further charges that accrue over the next few years.

A consistent decision may be nice and neat for future claims, but clearly it's better for individuals with claims now to be able to pursue them and get them dealt with in months, rather than have to wait years.

Will we lose our ability to claim older charges?

There is yet another concern with the FSA's waiver. Under the 'Statute of Limitations', we can make claims in the court going back just six years. Our six years are locked in from when we initiate court proceedings. So right now we could claim back to October 2001. Under court rules, if we must delay our claims till, say, October 2012, the judge will not consider claims going further back than October 2006.

To counter this, the FSA has a condition in its waiver to the banks that they must not use this rule to get out of paying claims back to 2001. The FSA can fine banks that breach this condition, or it can remove their licences to operate in this country.

My problem with this is that we can't be certain that the fine will be substantial enough to put off banks from ignoring the condition. Furthermore, I am not 100% confident that the FSA would go as far as removing a bank's licence for breaching it.

If you were to take your bank to court over this, the judge could not enforce the FSA's condition, as it's outside the courts' powers.

On the other hand, if you pursue your claim through the Financial Ombudsman Service, it is allowed to take into consideration the FSA's conditions. However, one of its representatives refused to promise to me that it would force banks to refund all its older charges.

What should you do now?

If you're in financial difficulty, you should still strongly consider pursuing a claim through court. On your claim form you should note that, despite the OFT's claim, you have serious financial difficulties and you need a resolution as soon as possible to help you out. The judge may ask for proof of your financial difficulties.

If your finances are reasonably healthy, I'm afraid you'll probably have a long wait on your hands. You could try the county courts, but most will no longer deal with our claims.

Regarding the six-year rule, despite my warnings above I think we should be OK; I'd like to think the Financial Ombudsman Service will enforce the FSA's waiver.

However, this is not certain. So, if you want to lock in your six years now, you can proceed with your claim by writing to the bank with an initial letter* and, on receiving your bank's response, go straight to issuing court proceedings*. The court will probably 'stay' your claim, which means it'll put it on hold till the OFT case is settled. If it wants to cancel the claim instead, write to it immediately stating you'd rather it was stayed, so that you can lock in the six-year period under the Statute of Limitations.

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The consumer body Which? has warned that recent changes by banks to the way overdraft fees are administered are not always in customers' favour.

Additionally, the changes may just be a smokescreen by the banks in order to distract consumers from the ongoing High Court test case over charges.

Banks may be trying to "muddy the waters", said personal finance campaigner Phil Jones.

He stated: "Some banks are now varying their charging structures following the public outcry over unfair fees, but the jury is still out on whether consumers will benefit.

"We welcome changes where charges are reduced and easier to understand"

Consumers who have been overcharged should claim back money from their bank using the template letters that Which? has supplied, Mr Jones added.

A full 83 per cent of bank customers would like to see the test case reach a clear-cut conclusion, research from MoneyExpert.com.

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A CARLISLE businessman spent a night in jail after a row over bank charges led to two cheques worth £90 bouncing.

Simon Tucker, 26, was furious after police arrested him at his home while he spent the evening with friends at his home.

He blamed Barclays Bank, with whom he had been in dispute after £240-worth of charges were slapped on his business account, for his arrest.

The former Workington Reds and Annan Athletic player reportedly threatened to close his account unless the charges were refunded and told bank officials to transfer its balance to his personal account.

Barclays, however, claimed Mr Tucker, a salesman, instructed them to close his account.

He said: “I have never been in trouble with the police before and the arrest was very upsetting.”

Police, who accused him of obtaining property by deception because the cheques were dated after the bank account was closed, released him on bail the following morning and later dropped the investigation.

And despite the Financial Ombudsman investigating the incident and ruling that Barclays were not at fault for the incident, the bank has offered him £1,000 compensation to the account of his firm – Tucks Limited – as a gesture of good faith, which Mr Tucker is understood to be considering.

A Barclays spokesman said that in light of funds being removed from the business account, two requests for the account to be closed Mr Tucker not attending an appointment, management thought he no longer wanted to retain his account.

He added: “Mr Tucker is upset the dishonour of the cheques led to his arrest. However, he asked for the account to be closed and requested the money in the account be removed.

“He would therefore have been fully aware that the account had insufficient funds and it either was closed or was being closed and no further cheques should be drawn on it.”

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